How To Maximize Your Discretionary Income

No matter how much money you make, you can always use a little more. But the truth is that you aren't always able to increase your income or cut costs. That's when it's time to look into ways to maximize your discretionary income, which is what you have to work with after taxes.

That said, here are some ways to make certain that you're getting the most bang out of your income buck.

Set up direct deposits

Direct deposits can save you money in two ways. First, your bank may waive some fees if you bank electronically. But the real savings comes with control. By putting a percentage of your paycheck into a checking account automatically, you limit the psychological effect of payday and you don't spend every last cent printed on your check as some other guys do.

Contribute to your 401(k)

Saving is always good, but 401(k) saving is even better. First, you get to put the money away before taxes, so you lower your tax liability. But better than that, a lot of companies match employee 401(k) contributions, which means you get to literally double your money (up to a preset limit).

Roll over your retirement money if changing jobs

You don't have to take your 401(k) with you when you leave your job, but there's really no good reason to leave it there. You have two options: either have the account transferred to your new employer or to an individual retirement account (IRA). The goal here is to bundle your funds (although the investment should remain diverse) because interest grows based on the total principal (meaning that the bigger the principal, the more interest you should earn). Just make sure that the transfer doesn't go through you, but rather directly to the new account manager, to avoid tax liability.